Question about Consolidated Statement of Cash Flows

1. (TCO 3) On January 1, 2009, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's reported net income was $204,000 and Race's net income was $806,000. Race decided to use the equity method to account for this investment. What was the non-controlling interest's share of consolidated net income?
$37,200
$22,800
$30,900
$32,900
$40,800

2. (TCO 3) Where do dividends paid by a subsidiary to the parent company appear on a consolidated statement of cash flows? (
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Supplemental schedule of non-cash investing and financing activities
They do not appear on the consolidated statement of cash flows

3. (TCO 3) Keenan Company has had bonds payable of $20,000 outstanding for several years. On January 1, 2009, when there was an unamortized premium of $2,000 with a remaining life of 10 years, Keenan's parent, Ross, Inc., purchased the bonds in the open market for $19,000. Keenan is a 90% owned subsidiary of Ross. The bonds pay 8% interest annually on December 31. The companies use the straight-line method to amortize interest revenue and expense. Compute the consolidated gain or loss on a consolidated income statement for 2009.
$3,000 gain
$3,000 loss
$1,000 gain
$1,000 loss
$2,000 gain

4. (TCO 3) Using the indirect method, where does the decrease in accounts receivable appear on a consolidated statement of cash flows?
$8,000 increase to net income as an operating activity
$8,000 decrease to net income as an operating activity
$6,400 increase to net income as an operating activity
$6,400 decrease to net income as an operating activity
$8,000 increase as an investing activity

5. (TCO 3) Stevens Company has had bonds payable of $10,000 outstanding for several years. On January 1, 2009, when there was an unamortized discount of $2,000 and a remaining life of 5 years. Its 80% owned subsidiary, Matthews Company, purchased the bonds in the open market for $11,000. The bonds pay 6% interest annually on December 31. The companies use the straight-line method to amortize interest revenue and expense. Compute the consolidated gain or loss on a consolidated income statement for 2009.
$1,000 gain
$1,000 loss
$2,000 loss
$3,000 loss
$3,000 gain

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Solution Summary

This solution includes responses to a set of mutliple choice questions that are based on consolidated income statement and consolidated cash flow statements.